Is China Geothermal Industry Development Group Limited's (HKG:8128) CEO Pay Justified?

Simply Wall St

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Manquan Wang has been the CEO of China Geothermal Industry Development Group Limited (HKG:8128) since 2016. First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for China Geothermal Industry Development Group

How Does Manquan Wang's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that China Geothermal Industry Development Group Limited has a market cap of HK$258m, and is paying total annual CEO compensation of HK$2.3m. (This is based on the year to December 2018). Notably, that's an increase of 77% over the year before. Notably, the salary of HK$2.2m is the vast majority of the CEO compensation. We looked at a group of companies with market capitalizations under HK$1.6b, and the median CEO total compensation was HK$1.7m.

Thus we can conclude that Manquan Wang receives more in total compensation than the median of a group of companies in the same market, and of similar size to China Geothermal Industry Development Group Limited. However, this doesn't necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see, below, how CEO compensation at China Geothermal Industry Development Group has changed over time.

SEHK:8128 CEO Compensation, June 12th 2019

Is China Geothermal Industry Development Group Limited Growing?

China Geothermal Industry Development Group Limited has reduced its earnings per share by an average of 74% a year, over the last three years (measured with a line of best fit). Its revenue is down -63% over last year.

Few shareholders would be pleased to read that earnings per share are lower over three years. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has China Geothermal Industry Development Group Limited Been A Good Investment?

Given the total loss of 71% over three years, many shareholders in China Geothermal Industry Development Group Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

We examined the amount China Geothermal Industry Development Group Limited pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

We think many shareholders would be underwhelmed with the business growth over the last three years.

Arguably worse, investors are without a positive return for the last three years. This contrasts with the growth in CEO remuneration, year on year. Some might well form the view that the CEO is paid too generously! So you may want to check if insiders are buying China Geothermal Industry Development Group shares with their own money (free access).

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.